Morning Thoughts – Oldinvestor

So I shorted UNG with 10 shares. It is doing quite well already. Storage sucks for November; and the rest of the market tumbled yesterday as well. Everyone and there brother has been talking about November falling hard since Henry Hub cash (the next day pricing for Henry Hub) has been staying well below $2. November contract, right now, is near $2.5. Cash will win out with storage this high and LNG continuing to show weakness.

First, my positions.

Position and P/L as of pre-market 9/30/20, click the image to view larger

Now that I’ve made this sheet to display my positions, it looks as though it needs to be cleaned up…. Later… Right now I’m holding SLB and UNL long, and shorted 10 shares of UNG. I could have gone long on KOLD; I mainly wanted to short UNG just to test it out in Webull. If something ever happens to BOIL/KOLD, the non leveraged ETNs will be all that is left.

Anyway, what to do from here. SLB first. Looks like if I’m going to roll, I had better do it very soon. The 18.5 call I’m holding is down to $0.04, and my break even is $17.46. So if I cover this call at 4c and roll out and down, I can get in a 17 strike call with expiration 30 days away for near 50c. This will be a zero gain trade, but I get the feeling SLB is not going to bounce right now. So I’m going to chase it lower by rolling down. I may regret this, but I want to see If I can catch this one. I wouldn’t try this with and NG related ETF, but I will with SLB. I can enter a call that is 37 days away (Nov 6 expiration), and get my break even below $17/share. This is what I am going to do this morning. Roll my SLB call down and out to 17 strike on Nov 6 expiration. This will not make but $21, vs the $104 or the original trade. I am behind nearly $200 just on the SLB trade, so if this helps me get back to a profit, or sets me up for another roll that will help get me back to a profit closer to year end, I will go that route. If SLB drops much further, I’m at a complete loss. At that point I will either cut it off and put that money into UNL or something else; or I can always just ride it out. Barf.

As for NG. I’m going to hold my UNG short to see if I can get another 3% and probably exit UNG. I am going to buy more UNL at some point, but I do not know yet when. The market isn’t there yet, this is all I know. I am sure to wait until LNG strength returns or is about to.

That’s it for me. Today is SLB roll out an down. Good Luck

Oldinvestor

Morning Thoughts – Oldinvestor

Something I didn’t mention yesterday because I was not aware of it yet; LNG is on the decline again. Here is data as of yesterday morning, 9/28/20.

Daily pipeline flows to LNG export facilities at RonHenergy.com

Weather is showing up amidst the chaos for once. At least in the way that I look at the data I get. Residential/Commercial had an increase in demand, due to the cold weather. It was 43 degrees F where I am; another day like this and we will have the heat on as the house cools.

My positions and P/L as of 9/29/20 per market

Not enough has changed for me to alter any of my positions. I’m content waiting. I’m slightly tempted to short UNG here. Short UNG/Long UNL is a trade I’ve been wanting to make, but I’ve been waiting. With UNG in November contract still, it is a hazardous situation for UNG. Remember, UNL is spread over 12 contracts, so the entire market must fall to take UNL down much. I’ll look into this at market open and post if I make a move. I’m showing an interest rate of 2.38% and 150% maintenance requirement, so I won’t be shorting much. Besides, I want to stay long biased with UNL anyway. Good Luck

Oldinvestor

I found that I can short pre market, and I decided to short 10 shares of UNG at $11.77

Morning Thoughts – Oldinvestor

Production is still weak, LNG is returning to strength, but Power burn if falling off the seasonal cliff. South Central storage will not fill to the max, but it’s still going to be interesting. East appears to be catching up, currently at 87% of capacity. There is really nothing and everything to be excited about right now. Storage is at an extreme, production is at an extreme low, LNG is fast approaching extreme highs. It has all become the norm though… I’m still just patient here. My only hope today is that SLB stops falling like a rock.

Positions and P/L as of pre market 9/28/20

It’s Monday, the market was up last night, and now down. It is too unknown at this point. Just hurry up and wait. I’ll be holding today and watching for any significant changes. Good Luck

Oldinvestor

Morning Thoughts – Oldinvestor

In the near term LNG is recovering while production is struggling. These two categories are so huge right now, what else is there? Storage is still a factor. South Central non salt injected 7Bcf last week. This week will be more, and the next week will return to something like last week. So the past becomes the future? hmm… I’m doubled down on UNL. I exited UNG too soon, but look at SLB… UNG could have done the same. I’m happy with where I’m holding. I’ll keep my positions the same today, unless UNG goes to $9.5 which is damn near impossible.

That’s it for me.

Positions as of pre market 9/25/20

UNL is going to give me 9.5 at some point, but not rush. Also, SLB should turn things around. Life for the energy service industry is rough right now. I’m content with waiting a bit on SLB. I hope your weekend is fantastic.

Oldinvestor

Morning Thoughts – Oldinvestor

My mind in being swallowed up with wiring harnesses and electronics for automotive gauges… But here’s the rundown. No-f’ing-one knows which way is up right now for natgas. People are getting stopped out left and right, on both sides. I’m more upset about all my equities going to shit yesterday. Luckily I’m still holding LABU short and that covered the whole slaughterfest… Geezus…

Anyway, Production keeps dropping. LNG is sucking but Sabine showing some life. Storage is now certainly livening up the entire situation. No doubt it’s time to be in UNL, because right now production is getting crushed. Storage will eventually go back to the norm, and production will be caught with their pants down. Meaning the longer this goes one, the more likely production will not recover enough to keep up with a lack in storage in the following 18-24 months. Production is quick to come online, but there are limits, and the boundaries will be tested over the next two years. To take a step back from this though; if pricing gets too wild in the US, LNG will suffer and correct the price. But right now my money is shifting to UNL. I’m going to add to my position today. I will double what I have in my Webull account.

I almost forgot, I exited UNG yesterday. With gas moving wild in both directions, a covered call is not a good choice for an options trade. UNL is for the long term, and the long term is better on the long side. My SLB position is sucking right now as well, but I’m willing to let the call expire, collect the premium and wait it out for a while.

Positions and P/L premarket 9/24/20

SLB has gotten too far out of range to roll out/down so I’ll wait to see if the underlying price will come back to something manageable. I have a couple weeks before I need to think too much about SLB.

Doubling up on UNL today. Good Luck

Oldinvestor

Morning Thoughts – Oldinvestor

Daily LNG export demand on pipelines at RonHenergy.com

Ouch! I saw some news of flooding around Houston. I’m guessing the Tropical Strom/Hurricane Beta may have caused this disruption with Sabine Pass and Freeport. Cameron has now been offline for almost a month. The chances of prompt pricing panic I guess are once again considered a possibility for many more than myself. Production has fallen back to May lows. I don’t know what regions are doing what, it almost doesn’t matter. If all areas of storage are filling as quickly and storage is already 90% of capacity, it’s simply a problem for everyone, not use South Central. Keep in mind, I feel like I’m speculating more than usual here.

I’m glad I made gains on BOIL and will be ready if the market does finally pop and move higher. This lower for longer idea may really take its toll on the market next year or even into 2022. If you want a discounted contract, summer of 2022 contracts are pretty cheap, around $2.5/MMbtu. I’ve got my long term play, UNL. I’m giving the market a little more time to see if it will keep up this pressure on pricing. Prices are probably repsonding to what’s happening now, so next week’s EIA report will not be such a surprise. If LNG doesn’t get its shit together again, and more quickly now, Henry Hub pricing is about to get a lot more interesting. Currently $1.45 or something? haha

I’m just going to continue to watch with my current positions. I’ve found another typo on my spreadsheet. I had SLB expiration for 9/25/20. I’ve corrected this to 10/09/20.

My positions and P/L as of this morning, 9/23/20

All three of my positions are currently held in my Webull example account. I have roughly $2424 in this account and it’s approaching a record loss dollar-wise. With UNG and SLB covered calls, these are fairly big positions for this account. So the pain will be greater to the account when they are hurting. I’m just below my breakeven for each UNG and SLB, but I’m thinking in a few weeks, with some help from rolling forward the call, I’ll be at a gain there. UNG is anyone’s game with Gas getting hammered. I may loose my shirt on that one if storage gets as bad as I keep crying about. We’ll have to wait and see. I have gotten away from giving a % of my account that is invested in a particular ETF, since this is not quite easy to do when options are involved. If I took the full cash value of my break-evens. $1746 for SLB would be 70% of my funds in SLB. $1190 for UNG would be roughly 47% of my funds for UNG, and roughly 18% for UNL. This is 135%… Exactly. I’m using margin, and I’m about $800 away from a margin call if things get really bad. I don’t think UNG will get wiped out, but it’s going to be a horrible roll if I don’t do something about UNG.

Ok, so I just looked at rolling my UNG down and out, and that option seems to suck, but could be helpful to sustain a new breakeven. I will be sacrificing almost all my profit (potential profit), depending on how far down I roll the call. Expiration is still roughly 23 days out, so… maybe roll out to 10/30/20 and down to 12 strike from 13, gain roughly 50 cents, and give myself room to roll again if needed. I’m going to try this today. Something that I don’t like about Webull; the web based platform, anyway, will not trade a “covered call” as 1 trade. I have to buy the shares and sell the call after I buy the shares. To roll a contract out, I have to buy the call back, then sell a new call manually. Most brokers just allow it in 1 order. Anyway, look for me to roll out and down on UNG today to a strike of 12, and out to Oct 30, 2020 expiration. Good Luck

Oldinvestor

Morning Thoughts – Oldinvestor

Production is still lower, wow. Of course storage is going to get harder to fill, possibly forcing production to slow. But the big news would be Cove Point going down for routine maintenance. This shouldn’t have such an affect on my South Central theory since Cove Point is in the Northeast US. Sabine Pass and Freeport will though. The EIA report should improve drastically this week as compared to the 5 year average. Next week’s EIA report will once again shine the spotlight on South Central storage again.

I’m still in waiting.

My positions as of this morning

I didn’t realize until now, but Webull will update my position data live, even in pre-market. It makes little difference, but any pre-market changes are shown in my positions update. I don’t really know what’s up with the move this morning. Almost seems like everyone’s favorite contract vs Oct just went south? I’ll be here, holding and waiting. Good Luck

Oldinvestor

Morning Thoughts – Oldinvestor

So production got hit, then came back then hit again. I don’t know why or where. At this point it is hard to believe production would fall much further in the short term. By this, I mean quick and sharp losses, like wells were shut in. It could be maintenance somewhere that I don’t know about. LNG has also taken a hit at Sabine Pass and Freeport, but not before total exports reached 8 Bcf for a day.

Ron H passed on to everyone on Twitter yesterday that Cameron may get power by the end of the month. That is awesome. I would imagine Entergy is having to re-wire and sink new poles in the ground. So natgas will will most likely take a bit longer to use up that extra storage. I got some UNL late last week in my account that I don’t share, but I’m in no rush to add with the current oversupply continuing and the erratic conditions with LNG exports.

As for my positions. I will remain unchanged. I could add to UNL, but there is this small chance prices could fall a little further. For someone just getting in, a good trade right now, I would think, is Long UNL/Short UNG, with a lot of weight on UNL. Also I wouldn’t short UNG unless it there was no interest fees to short it. $0.53 in contango from X to Z contract. That’s roughly 16% or $2 lost to contango in UNG.

My positions and P/L as of market close 9/18/20

I’ll be holding to see what happens. Everything has been turned upside down in natgas and it is certainly hard to sift through at the rate I do lately. No need in being in a rush; I want to see how the market does this week some before I choose to add to UNL. That may be my next move. Good Luck

Oldinvestor

Morning Thoughts – Oldinvestor

Natgas prices at Barchart.com click the image to go to the same list for free

Forward natgas pricing is taking a beating. Forward, meaning the earlier contracts to expire. My South Central theory just got a big boost this week.

Storage by region at EIA.gov click the image to go to their site

We can see that South Central Non-salt is at 92% of capacity. This is more full than storage gets most years at any point throughout the year. Other areas of the country are also not far behind. Many more weeks such as this and there would literally be no place to put natural gas.

Entergy.com outage map for Louisiana, circled is area for Cameron LNG export facility

Cameron is still without power. I can imagine someone with big data is sending someone to go drive around the area to asses what is going on. To think I was counting on there being outages here and there, now that LNG exports have grown to this size. I wasn’t counting on this. Good thing I’ve been so paranoid of South Central storage since it was brought to my attention.

Granted, South Central non-salt will most likely (like 99% chance) will not reach maximum capacity. But… it is the threat that will drive prompt pricing off a cliff. All the more reason to be cautious going long. I went long on UNG a bit too soon.

My current positions as of market close 9/17/20

I’m still big on UNL, I’ll continue to hold this until next year possibly. Maybe it will be the first long term gain I’ve recorded in 20 years. SLB is doing well and could possibly keep my account alive while UNG suffers.

So I’m out of BOIL! wow, I didn’t expect this… I did not cover these trades because they were at a profit. I covered because the market took a direction that will set me up for a better entry. When Cameron comes back online and prompt pricing is no longer under attack from storage scares, I’ll then give it some more time to come up from recently developing lows and wait for a point at which BOIL is starting to get deeper into the Hard to borrow category. I’ve learned there is a much better deal to be had, while still being able to get shares of BOIL to short. Remember I’m shorting BOIL with deep ITM covered puts just so I can get the shares shorted before they become impossible to borrow. This trade has little to do with making money on the covered puts. It’s a big investment that may take months to survive; but the payout could be 50% of the investment. I’ll take 50% gains ROI in less than a year. The market still must move in the direction I need to pull it off, so it may be a long wait for this trade to actually work. Right now I’m just happy to be where I’m at with what I’ve shared. I will be adding to UNL today in my bigger account that I normally do not share. Also, now that I’ve added money to my example account to convert it to a margin account, my UNL position is closer to 20% of the account value. The UNG covered call is roughly 50% and the SLB covered call is roughly 72% of the account. I’m on margin, so I’m beyond 100% of my cash value, I must be careful right now in this account. It’s more about protecting my ASSets. I hope everyone is a little more clear that was completely lost in Natgas. And I hope I’m not completely off base. I hope everyone has a great weekend.

Oldinvestor

Morning Thoughts – Oldinvestor

Gas is lower and I”m not quite sure why. My best guess is Lack of LNG demand with Cameron being down and idea that they will continue to be down. Also Oil prices are getting a shock, which could spur a little growth in production. Though I keep hearing how OPEC and non-OPEC need to cut? and oil demand just isn’t there? I don’t like Oil and am not up to date with oil. I just know that there was a huge surprise draw on the EIA oil report yesterday and it spurred pricing. If oil prices rise, so will production and so will the hard hit associated gas. This is kind of a long shot for me. I don’t put a lot of emphasis on this idea. It could be that the market is actually worried about South Central storage now, and lack of LNG right now when it matters most. Even in early draw season, South Central could continue to build storage because temperatures will be mild during early winter.

I’m getting called away again

I’m dumping my BOIL covered puts. Because the market is going further than I expected. I am at a profit (enough to at least cover the interest paid for the BOIL short). So I’m dumping them and I’ll risk not getting short and pick them up again later. My other positions remain the same.

I should be back, we’ll see